Add toolbar: [true:'top'] in the grid configuration to add the toolbar. Then you can add the dropdown to the toolbar using:

$('#t_<grid_name>').append('<select id='testId'></select>');

t_<grid_name> is the id of the toolbar. As you have the id you can easily define the operations on the hover event.

grid_name is the id of the table that you want to convert into the jqgrid.

Thanks,